Category Archives: Sustainability

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Liner customers “bewildered” by new low-sulfur fuel charges – FreightWaves

Ocean carriers are confusing their customers again.  This time, it’s the low-sulphur fuel charges which are being put in place before the requirement to use it is mandated.   Each carrier has different charges, with different bases.  The result is confusion about the impact.  Some charges are being billed as “sustainability” charges. That means different things to different customers.  Most of them translate to “higher cost”.  Carriers are using various international indices to measure the changes in contracts, which may or may not relate to the actual extra cost.  And some ships are being fit to use LNG rather than the low-sulfur marine fuel, which is a whole different calculation.

Here’s an example from the article of a typical letter.

Evergreen Lo-sulfur fuel memo

The article finally gets to the bottom line.  Customers are worried that the new charges will be used by the carriers as profit centers rather than just recovering their costs.  the rate rises might go into carriers’ pockets rather than fund sustainability or simple costs.  It’s a reasonable worry, given that fuel surcharges have been used that way in the past by the carriers. Everyone knows the carriers are operating at very thin margins, particularly in the container trade.

It seems like more public relations needs to be done by carriers.  They also need to pay attention to the cost allocation part.  How can they reassure shippers that they won’t be overcharging them?  Cost allocation issues surround many business decisions, and need to be thought through.

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via Liner customers “bewildered” by new low-sulfur fuel charges – FreightWaves

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Posted on October 2, 2019 by in Logistics, Ports, Shipping, Supply Chains, Sustainability

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How robots change the world | Oxford Economics

Thanks to Supply Chain Digest for promoting this study by Oxford Economics.  Read the article here for a synopsis of its findings: Supply Chain News: Oxford Economics Says Robots Benefits will Outweigh Cons

Basically, it says robots will greatly raise productivity and take jobs with a repetitive aspect, displacing workers toward jobs with high cognitive content.  But there may be local dislocations that will be hard for some people.   We’d better prepare for that and put in measures to alleviate the suffering, if we care about people and their lives.  They think about 1.6 jobs will be lost for every job robots take. but GNP may grow 5% as a result.  China is the major user of robots now, and the revolution promises to be harder on them than any other country as it looks now.

It isn’t clear from the summary whether the 1.6 jobs lost will be found again in other sectors, such as service and sales, support of the robots, or technical work like fixing the robots.  Nonetheless this kind of assessment is an eye opener to concerns we may have in our economy and political world for quite a while.

The report is available here:  How robots change the world | Oxford Economics

Or here: Oxford Economics 2019 Report – How Robots Change the World

 

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Posted on July 2, 2019 by in Advanced Computing, Labor Economics, Logistics, Managerial Econ, Production Operations, Strategy, Sustainability

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BIMCO launches new cybersecurity clause

BIMCO is one of the leading standardization forces in the world of shipping. Here is an example related to cybersecurity.

How do you write a contract that binds participants to provide an appropriate level of cybersecurity?  As the article makes clear, cybersecurity has been an issue in several recent shipping incidents.  Cyber attack is very real, and shipboard systems are great targets; they have low-speed interfaces to the network, there are relatively few kinds of content transmitted, and they operate in international waters where there is no specific enforcement.  And cybersecurity can be expensive, though it is low-cost compared to the damage that could result from just one incident.

Standards are needed.  BIMCO springs to the task.  The drafting team consisted of a law firm, shipowners, P&I clubs, and Klaveness, a maritime investment firm.  There’s a two-fold notification process; immediate notification of an incident, and then a detailed notification once an incident has been investigated.

The parties are required to share the information throughout. This last point is important, because cyber events often require joint resolutions for mitigation and future prevention.

The contract element also requires any third parties employed by the participants to have adequate cybersecurity, and makes the primary firms responsible for seeing to it.

Now we will have to see whether the clause catches on in the contracts we see written.  There is always a risk with a top-down driven standard; it may miss the issues the market needs to address.

Research has shown (albeit in other contexts, such as health care) that top-down standard initiation often does not produce the penetration of results that flexible evolution of a standard does.  However, someone has to start the ball rolling, and here we have a credible effort.

Let’s now see more innovation in this area of contracting, and let’s see the results in the open, so the best combination of terms emerges and gets global acceptance.

screenshot-Digital Ship 2019-05-24  via BIMCO launches new cybersecurity clause – Digital Ship – The world leader in maritime IT news

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Posted on May 24, 2019 by in Logistics, Shipping, Strategy, Supply Chains, Sustainability

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